Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Finance

EU inflation to subside, debt must fall but without hurting growth -ministers

2021 11 08T095037Z 2 LYNXMPEHA70FI RTROPTP 4 EUROZONE EUROGROUP - Global Banking | Finance

By Jan Strupczewski

BRUSSELS (Reuters) – European Union finance ministers agreed on Monday that the current surge in consumer prices would subside next year and that high public debt created by the pandemic had to be reduced, but in a way that would not hurt economic growth.

Inflation rose 4.1% year-on-year last month in the 19 countries sharing the euro, up from 3.4% in September and the ministers are starting to worry that the rise might fuel stronger wage growth, creating an inflationary spiral.

“While the increase in prices is largely due to temporary factors, this increase is more persistent than anticipated due to the strength of the recovery,” the chairman of euro zone finance ministers Paschal Donohoe told a news conference.

“But we continue to expect their changing and lessening over 2022 and into 2023,” he said after the ministerial discussions, echoing the views of the European Central Bank.

The October inflation surge was mainly driven by a 23.5% jump in energy prices amid a jump in demand from the rapidly recovering economy, but ministers also pointed to supply chain bottlenecks created by the same pent-up demand.

HOW TO CUT DEBT WITHOUT HURTING GROWTH

The ministers also started talks on a planned reform of the EU’s budget rules, which oblige governments to keep budget deficits below 3% of GDP and debt below 60%, to adjust them to post-pandemic economic realities of high public debt and large investment needs to fight climate change.

The rules now require annual public debt cuts that are too ambitious for most EU countries and provide little explicit support for government investment.

“I did not hear … proposals focused on changing the treaties, or the threshold of the treaties,” European Economic Commissioner Paolo Gentiloni told the news conference.

“There is large awareness that we have this high level of debt and we have to find ways to seriously reduce it, even if it is less costly than 20 years ago … but in a growth-friendly way, which is not at all easy. We don’t have a consensus how to do this, but there is a large awareness that this is a problem to address,” he said.

Governments are divided over the extent of changes needed. Southern EU countries are more keen on relaxing debt reduction rules and giving special status to investment like exempting it from deficit calculations, than northern states.

“Different ideas are still around the table,” Gentiloni said. “It was a good start today, but we have to work a lot to build consensus for the proposals we will put on the table in the first quarter of next year,” he said.

(Reporting by Jan Strupczewski; editing by Timothy Heritage and Jonathan Oatis)

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post